Diversified Citrus is an international bycicle manufacturer that is planning to launch a new bike that uses new technology which will allow the bike to fly 100 times farther and 100 times longer than any existing bike on the market. Cost of research and development is $2,500,000 and the bike market size is currently measured at 3,500,000 of which currently serves 40 % Newspaper advertising will carry a coupon that will entitle the consumer to receive $20.00 off the price of each drone purchased Research has shown that 50 % of customers will redeem the coupon. (Coupon redemption is a variable cost). The cost of the newspaper advertising ( excluding coupon returns) will be $700,000 . Other fixed costs will be $3 million per year. The cost to produce each bike at $30. The finding of several research studies has determined that consumers would be willing to pay $100 for each bike at which the retail selling price would be targeted . The retailer's margin is 30% and the wholesaler's margin is 20%. 1. What is the company's breakeven in units ? 2. What is the company's breakeven in dollars 3.What is the company's breakeven share of market as a percentage ?
